Adani Ports pulls out of $553 million US funding deal for strategic Colombo Terminal project

Adani Ports and Special Economic Zone Ltd (APSEZ) has decided to withdraw its request for financing from the US International Development Finance Corporation (DFC) for the Colombo West International Terminal (CWIT) project in Sri Lanka, the company said in a regulatory filing on Tuesday.

“The project will be financed through the company’s internal accruals and capital management plan. We have withdrawn our request for financing from the DFC,” Adani Ports said.

Why Adani Ports opted out

The DFC had previously committed a $553 million loan to support the CWIT project, part of the US government’s efforts to counter China’s growing influence in the region. However, the funding process stalled after the DFC sought amendments to the agreement between Adani and the Sri Lanka Ports Authority to meet its conditions, reported PTI quoting officials privy to the process.

The decision comes against the backdrop of legal challenges faced by the Adani Group in the United States. Last month, the US Department of Justice charged the conglomerate’s founder, Gautam Adani, and seven others with allegedly conspiring to pay $265 million in bribes to Indian officials for solar power contracts. Adani Group has denied the allegations and vowed to contest the charges legally.

The US agency had recently stated that it was "actively assessing the ramifications" of the bribery allegations against the Adani group executives. It had so far not disbursed any money to the ports-to-energy conglomerate.

The Port of Colombo is the largest and busiest transhipment port in the Indian Ocean. It has been operating at more than 90 per cent utilisation since 2021, signalling its need for additional capacity.

Phase 1 of the CWIT project, which began in September 2021, is slated to commence commercial operations in the first quarter of 2025. The terminal will serve economies in the Bay of Bengal, leveraging Sri Lanka’s strategic location on key shipping routes.

As of September 30, 2024, Adani Ports had approximately USD 1.1 billion (Rs 8,893 crore) in cash reserves and generated an operating profit of USD 2.3 billion (Rs 18,846 crore) in the past 12 months.